Court affirms certainty of title in landmark decision

(CMR) A ruling by the Grand Court that residential proprietors in the Britannia Development had rights to enjoy facilities, including a beach and a golf club, on lands now owned by Dart has been overturned by the Cayman Islands Court of Appeal.

The landmark judgment was delivered today, 7 March, in the case of Cayman Shores Development Ltd and Palm Sunshine Ltd v Registrar of Lands and others in an appeal of a judgment dated 9 June 2021.  The central issue was whether rights, purportedly granted in instruments dating from 1992 to  2001 to play golf, to play tennis, and to enjoy facilities on certain land in and around West Bay  Road in Grand Cayman were binding upon the current owners of that land.

The Court of Appeal said while recognizing that the outcome of this appeal will have a profoundly negative impact on some 193 proprietors who likely paid a premium for these rights when purchasing their properties, the apparent restrictive agreements for protecting the Rights,  lacked the essential ingredient required by section 93 (1) of the RLA.

“It is most unfortunate that the proprietors must bear the consequences of the mistaken selection of this defective mechanism for the protection of the  Right,” the Court said.

The Court of Appeal said there was no restrictive agreement and that the Grand Court misconstrued clause 3 of the Instruments and erred in finding that there was an express or implied agreement by the registered proprietor of the servient parcel (Cayman Hotel) not to modify the Facilities constituting the Rights or their location or to suspend the exercise of the Rights other than for the purpose of carrying out repairs or maintenance.

In the 2021 ruling, the Grand Court found that those rights bound land owners, subject to the need for rectification of the land register to add an express reference to one legal aspect of them, namely as easements. The judge ordered that the land register be rectified accordingly.

However, the Court of Appeal found that the relevant instruments did not contain any restrictive agreements; the relevant rights were not perfected by registration as easements pursuant to the Registered Land Act (RLA); and there was no rectifiable mistake under the RLA, emphasizing the importance of respecting the parties’ apparent decision to enter into and register in the land register (Register) restrictive agreements only, and not easements.

The Court of Appeal has decided that the Land Registrar must now rectify the errors in the Land Register by canceling and deleting the rights in their entirety.  The Court specifically stated:

“As things currently stand, the register contains entries registering agreements that do not qualify for registration by reason of failing to satisfy the definition of restrictive agreements provided for in section 93(1) LRA. Those entries are accordingly grossly inaccurate and give a very misleading impression. In our view the case for their deletion is overwhelming.” 

Appleby, which represented Dart in this matter, said by giving primacy to commercial certainty, the Court of Appeal's judgment marks the reversal of a decision that created potentially impracticable consequences for the future use of the Land.

On the Grand Court’s reasoning, the golf course land at Britannia could only be used to play golf by the Owners, but there was no requirement for the Dart Companies to maintain it as such and it could not be modified to any alternative use.

The strict approach taken by CICA to the formal requirements of registration, although resulting in a negative impact on owners, is arguably necessary for the purpose of maintaining the integrity of the land registration system, Appleby stated.

The creation of a land registration system that enables users to treat the Register as an accurate record of all entitlements to land is the whole point of that system under the RLA, Appleby added.

Appleby further explained that CICA’s decision serves as a reminder to parties intending to enter into restrictive agreements and/or easements, and crucially their lawyers, to ensure that the instruments purporting to record those agreements or grant those rights are clearly drafted and registered in the correct form.

It confirms that simply identifying a right over land as protected by a ‘restrictive agreement’, and registering it as such, is insufficient if the agreement does not actually contain any promise by a landowner restricting the use of its land within s 93 RLA. It also confirms the limits of what the courts can do to rectify after the fact if an incorrect mechanism is used.  The decision may also prompt others to review the adequacy of historic arrangements already in place.

Counsel team included Jonathan Seitler KC and Emer Murphy of Wilberforce Chambers.